Big Year for Stocks = Big Year for Capital Gains Taxes

By Brendan Conway

Fidelity’s $16 billion Magellan Fund (FMAGX) plans to distribute capital gains of $5.52 a share in 2013. That is up from just 2 cents a share in 2012, according to fund disclosures. So far in 2013, the fund is up 32 percent.

Boston-based Fidelity, the No. 2 U.S. mutual fund company, said it is difficult to broadly characterize distributions from funds. But many Fidelity stock funds will distribute gains to investors this year, Fidelity spokesman Charlie Keller said.

Shareholders, except for those in tax-deferred accounts such as 401(k) plans, are required to pay taxes on the distributions, regardless of whether they are paid out in cash or reinvested in more shares. Short-term capital gains are taxed at ordinary income tax rates while long-term gains are taxed at a maximum rate of 20 percent.

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DECEMBER 11, 2013 3:39 P.M.

Anonymous wrote:

YTD, FMAGX already distributed $5.845 in capital gains. But, that's at a NAV of $80-90, so not a "large" (10%+) distribution. Also, the max. tax rate on long-term gains is 23.8% not 20% -- do not forget the ACA surtax.

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Chris Dieterich has covered the U.S. stock market for The Wall Street Journal and Dow Jones Newswires. He is a graduate of Regis University and the Missouri School of Journalism.